The unlocking of the potential and stability across operations benefited the energy-intensive business.
South32’s energy-intensive Hillside aluminium smelter in Richards Bay delivered a record production performance despite unprecedented loadshedding over the past financial year.
The global diversified miner, which is listed on the JSE and Australian Securities Exchange, reported that saleable production from the smelter increased by three kilotons (kt) to produce a record 718kt in the financial year to end-June 2020, as the smelter continued to test its maximum technical capacity.
Hillside Aluminium is considered an essential business in South Africa for the maintenance of power generation, given the role it plays in the sustainability of Eskom’s generation network.
As a result, the smelter continued to operate despite the nationwide lockdown, diversified mining company South32 said. But owing to uncertainty around the COVID-19 pandemic, production guidance for the 2020 financial year has been withdrawn by South32, which is headed by CEO Graham Kerr.
Eskom was also at the centre of different contract discussions South32 was having on long-term electricity supply to its Hillside aluminium smelter. Kerr said the company was “never going to get” a repeat of the former supply agreement in which the power tariff rose or fell in proportion to aluminium prices on the London Metal Exchange.
“You should model it on the Mozal contract for cost base and structure,” said Kerr of the proposed new electricity contract under discussion with Eskom as well as the National Energy Regulator of South Africa (Nersa), the oversight regulatory body that has to give its approval to the contract.
SOUTH32 trades in unfashionable aluminium, manganese as well as metallurgical and thermal coals which have not experienced the supply deficits of other minerals as reflected in the firm’s 16% full-year revenue decline to $6.1 billion for the year.
South32 has also announced that it had placed its manganese alloys Metalloys smelter in Meyerton, Gauteng, on temporary care and maintenance. The Sydney and Johannesburg-listed company stated in its June 2020 quarterly report that it had taken this decision after consideration of the future economic viability of Metalloys.
The temporary closure came against the background of manganese alloy saleable production decreasing by 23%, or 16 000 tons to 53 000 tons in its financial year 2020.